Stamping Out Unpaid Internships

In recent months internships have been under the spotlight like never before. A simple scheme designed to give young go-getters some vital work experience in the industry of their choosing and in return provide organisations with a boost to productivity and a chance to nurture future talent is being challenged and it needs to ensure its house is in order very quickly.

The big issue is that all interns should be paid the national minimum wage. Now there is no real grey area here….as an organisation you either know this and action it or you don’t know it and suddenly you have a slight sweat and a dry mouth as you read on….if you fall into the latter group, the news is about to get worse and you are probably going to have full blown chest palpitations when I tell you the penalty for not paying interns is that organisations face claims for back pay from previous interns and possible criminal penalties…although the government admits they haven’t ‘yet’ prosecuted anyone for unpaid internships.

The problem is the traditional unpaid internship from 15 years ago was not in-demand as much as today. Graduate numbers were fewer and academic qualifications carried more weight. Now, graduate numbers are overwhelming and many see relevant work experience as the best means of obtaining an advantage in a competitive job market – a degree alone is not enough. The more high-profile and prestigious a firm where you do your internship the better. At the same time though organisations have become more demanding of their interns. Recent headlines detailed organisations demanding payment from interns who leave their unpaid internships early or companies providing 20-page manuals detailing every aspect of work expected of them. In short, organisations have pushed things too far and have been identified as being exploitative.

There is no moving away from the key point though; if you bring an intern into an organisation they should receive at least the National Minimum Wage. There are exceptions such as when the intern is on a sandwich course (as part of a higher education course), they are just work shadowing or working for a registered charity. But, when there are set hours, duties of responsibility and the intern is part of the commercial operation of an organisation they should be paid.

Despite the recent press coverage and HMRC stating they intend to crackdown on this area it is estimated that between 70,000 to 100,000 underpaid internships take place in the UK each year. Part of the recent outrage surrounding this is not just that it is illegal but it is detrimental to social mobility. Only the rich and privileged can afford to undertake an unpaid internship while the poor are excluded from gaining experience in this way. By having all paid minimum wage, it becomes fair and open to rich and poor alike.

In recent days though the story broke via The Times that wealthy American students were paying up to $10,000 to secure unpaid internships at British companies….in effect they are paying to work in industries such as fashion, advertising, media and law with a view of enhancing their CV. The $10,000 dollars does provide accommodation, visa assistance and trips away at the weekends…..and as you guessed the company providing this experience state on their website “…the vast majority of our internship placements are unpaid…”.

I have no doubt an internship that is well structured and designed to be mutually beneficial for all parties can be incredibly – and I guess many recent graduates believe this given the rising demand. But – if you are struggling to find an internship and sweating over how this could hamper your future career progression – DON’T!!!!

Recent research has shown graduates would be considerably better off not doing an internship – in fact it was suggested they should come with a health warning! Almost every candidate undertaking an internship can expect to be worse off three years later than had they not; former interns face a salary penalty of approximately 3.5k compared to those going straight into paid work, and 1.5k compared to those who went into further study. Interns were also reported to struggle obtaining a professional position, a permanent job or high career satisfaction compared with those who go straight into paid employment.

Ok, the research is slightly flawed in a sense because internships are typically being offered in sectors which are highly competitive and do not need to pay high salaries to attract employees. Many will take a pay cut for the privilege of working in the creative or charity sectors. So, the above should be taken with a considerable pinch of salt.

Work experience is clearly an advantage for those entering the job market and internships do provide a vehicle for obtaining this. But, maybe the hype and belief in their value is overstated. Maybe recent graduates should consider internships as a fall-back position rather than their top priority. In turn organisations need to make sure they are legally compliant by paying interns and not exploiting them…because the government is now watching!

About the Author:

Simon Royston is the founder and Managing Director of The Recruitment Lab (A recruitment agency with offices in Aldershot and Brighton that offers employment services across Berkshire, Hampshire, Surrey, Sussex and beyond). Simon lives in Guildford and has worked in Recruitment for over a decade. He has a degree and a masters in psychology as well as a diploma in Human Resource Management. If you would like to know more about anything written in this blog or would simply like to express your own thoughts and opinions do not hesitate to contact Simon through The Recruitment Lab website.